KUALA LUMPUR: Kenanga Investment Bank Bhd (KIBB) is selling off its wholly-owned Libra Invest Bhd, which it had stripped down for consolidation with its asset management arm towards the end of last year, for RM10.75 million.

Libra Invest — formerly the fund management arm of ECM Libra Financial Group Bhd that KIBB acquired for RM50.6 million in July last year — is sold to Ericsenz Partners Sdn Bhd, according to KIBB in a stock exchange filing yesterday.

Following a business transfer process completed in late November — whereby certain assets, liabilities and undertakings were transferred to KIBB’s asset management arm, Kenanga Investors Bhd — KIBB’s cost of investment in Libra Invest was reduced from RM50.6 million to RM15.6 million.

Subsequently, Libra Invest was left with assets under management of about RM3 million, and two staff members —  including a licensed fund manager. It remains a licensed fund management company involved in the management of unit trust funds and the provision of fund management services.

Notably, prior to the disposal, Kenanga Investors will have Libra Invest declare its distributable retained earnings amounting to RM8.68 million as dividends. Libra Invest, it said, will be left with a net asset of RM6.54 million before the completion of the disposal.

The proposed disposal is expected to book KIBB a pro forma gain of RM4.21 million, and is expected to be completed by the early third quarter of 2020. Proceeds from the disposal will be used for the group’s working capital requirement.

"The business transfer was originally intended to streamline KIB Group’s business structure while retaining Libra Invest and its licence to facilitate KIB’s potential strategic plan to venture into digital services. Notwithstanding that, KIB had subsequently received the offer from the purchaser to acquire Libra Invest. The board of KIB, having deliberated the offer, is of the opinion that the offer is reasonable and is in the best interest of KIB in view of the implied valuation," KIBB said.

KIB inked a conditional share purchase agreement yesterday with Ericsenz Partners to effect the disposal. Its sole shareholder, Eric Oh, is the founder and shareholder of Ericsenz Capital Pte Ltd, a fund manager licensed by the Monetary Authority of Singapore.

KIBB shares closed one sen or 2.6% higher at 40 sen yesterday, giving it a market capitalisation of RM279.48 million.